(Reuters circulated the following story on June 1.)
CALGARY — Canadian Pacific Railway Ltd.’s fuel surcharge will be more closely tied to oil-price movements under a change it is implementing just as crude is surging to record levels, it said on Tuesday.
CP Rail, the country’s second-largest carrier, said the surcharge will be calculated based on the monthly average price of U.S. benchmark West Texas Intermediate oil, instead of a quarterly average.
The extra charge to shippers, aimed at cushioning the blow of soaring fuel prices, will be 2 percent of freight charges when the monthly average oil price reaches $24 a barrel, and 4 percent when crude averages $27.
It will rise by 0.4 percent for each additional $1 a barrel, and fall when crude does, using the same formula, CP Rail said.
U.S. oil prices jumped to a record $42 a barrel on Tuesday fueled by a weekend attack in Saudi Arabia by Islamic militants who killed 22 people and raised tension over political instability in the Middle East.
That was the highest price since crude started trading on the New York Mercantile Exchange in 1983.
CP Rail’s new surcharge program, which is effective immediately, applies to published tariff rates, new rate quotations and contract renewals, it said.
Its shares were down 52 Canadian cents at C$30.17 on the Toronto Stock Exchange.
($1=$1.37 Canadian)